Job Outsourcing Debate has Been Outsourced

Daniel Drezner puts to rest the longstanding debate over job outsourcing and the damage it's causing our economy. Not that it was ever really an issue.

The New York Times
This month a poll by Zogby International for the Foreign Policy Association found that 71 percent of Americans believed outsourcing was hurting the economy. It also found that 62 percent of American workers believed the federal government should penalize companies that send work offshore.

Now, however, we can add some actual figures to the overheated debate. The Government Accountability Office has issued its first review of the data, and one undeniable conclusion to be drawn from it is that outsourcing is not quite the job-destroying tsunami it's been made out to be. Of the 1.5 million jobs lost last year in "mass layoffs'' - that is, when 50 or more workers are let go at once - less than 1 percent were attributed to overseas relocation; that was a decline from the previous year. In 2002, only about 4 percent of the money directly invested by American companies overseas went to the developing countries that are most likely to account for outsourced jobs - and most of that money was concentrated in manufacturing.

The data did show that from 1997 to 2002, annual imports of business, technical and professional services increased by $16.3 billion. However, during that same half-decade, exports of those services increased by $20.5 billion a year. In 2002 alone, the United States ran a $27 billion trade surplus in business services, the sector in which jobs are most likely to be outsourced.

Now we know that outsourcing isn't a problem. In fact outsourcing from other countries (insourcing for us) is a major surplus. The thing is - we already knew that; it was never really in question. This Heritage Foundation article from April predicts, pretty accurately, the results of the study by the GAO.

Heritage Foundation
Myth #3: Outsourcing will cause a net loss of 3.3 million jobs.

Fact: Outsourcing has little net impact, and represents less than 1 percent of gross job turnover.

Over the past decade, America has lost an average of 7.71 million jobs every quarter.[4] The most alarmist prediction of jobs lost to outsourcing, by Forrester Research, estimates that 3.3 million service jobs will be outsourced between 2000 and 2015—an average of 55,000 jobs outsourced per quarter, or only 0.71 percent of all jobs lost per quarter.

[...]

Myth #6: Outsourcing is a one-way street.

Fact: Outsourcing works both ways.

The number of jobs coming from other countries to the U.S. (jobs “insourced”) is growing at a faster rate than jobs lost overseas. According to the Organization for International Investment, the numbers of manufacturing jobs insourced to the United States grew by 82 percent, while the number outsourced overseas grew by only 23 percent.[5] Moreover, these insourced jobs are often higher-paying than those outsourced.[6]

OK, so it's not a problem. Never was. No one who pays any attention, on either side of the debate, seriously thought it was a problem. So why was so much energy spent discussing it? Why is it that, as Drezner points out, "the phenomenon landed simultaneously on the covers of Time, The Economist and BusinessWeek?" Who is it that drives this insinsere coverage by the mainstream media which in turn drives the debate between the campaigns?

Even without the recent exposure, courtesy of Dan Rather, of the relationship between the DNC and big media, it's pretty easy to figure out who's behind it. Just answer the question, "who attacked who?"

Update: I've been corrected. The question should be "who attacked whom?" I should know better, thanks Peg.